Dubai: Retail banking is still very profitable and growing, but the business in the UAE is going through some fundamental changes like the introduction of credit bureau that is expected to make the business better in the medium and long term, said Subroto Som, Head of Retail Banking Group at Mashreq.
Historically retail banking business in the UAE follows a cyclical pattern; that is a few years of great business followed by a couple of years of turbulence. With the arrival of credit bureau, the cyclical nature of the business is expected to slowly disappear.
“The Credit Bureau has brought greater transparency in credit data. This will make sure that lending is done in a responsible manner with no bank or individual going into the unacceptable range,” said Som.
He expects the changes will make credit available at reasonable and better price to good customers and will allow for greater differentiation of high risk customers. But the act of transforming the business from the old way to a new way is going to be bumpy. That is what is happening right now in the market.
Apart from the credit bureau, the retail banking transformation is also driven by technology and fintech. “I think fintec is changing the whole sphere of engagement with inclusion at the lower and transaction at the higher end. The transformation is taking place in a big way. I actually feel that banking will look very different 2 or 3 years’ time,” he said.
These changes, he said, will require greater knowledge, ability and expertise to manage. Bankers will need foresight to decide on where to spend time and capital. But to the great advantage of banks, capital investments to do new technology projects are becoming cheaper than ever.
Som believes that fintech companies and banks are not at logger heads, they are not even competitors.
“Banks are well regulated and protected as they deal with the larger ecosystem. But banks need to change and the transformation which they need will not be from inside. Fintechs on the other hand are great ideas and great solutions which need adoption and customers. Actually there is scope for very good cooperation to create greater value for themselves and for the consumers,” said Som.
“Digital and internet are two good platforms to work with. So my job here is to take the bank to the next level and to focus on those areas where there is higher growth,” he said.
